February 26, 2020 COVID-19 outbreak & the markets:The S&P 500 posted its worst day since 2011 and all major US equity indexes plunged more than -4.4% on Thursday, each entering correction territory. That means the U.S. equities have fallen more than -10% from recent highs. Further, equity markets are down another 2-3% today. It is our view that institutional equity exposure was overly bullish toward equities and were aligned with the assumption that the global economy and corporate profits were not going to be meaningfully impacted by the virus. However, with increasing spread of the virus, only now (this week) is institutional investor risk in portfolios now being aligned downward. Our client portfolios have layers in greater diversity than the average investor portfolio – bonds, treasuries, real estate, gold, alternative strategies (including mutual hedge funds), preferred shares, convertible bonds, etc. - therefore our client portfolios have had only partial exposure to these losses, in the range of 0.35%-0.55%. Periodic corrections in the markets are to be expected and occur every 14-16 months – thus, the markets were pre-exposed to recede given the last correction happened over 26 months ago (Dec 2018). At this stage, our portfolio risk mitigation has been relatively helpful during this crisis and until we foresee significant change in the world’s largest economy – the U.S. market – then we remain properly aligned. To recap, the volatility spike by the U.S. capital markets reflects growing virus outbreaks in Europe and Asia, including relatively large-scale new quarantines in cities that now have extended outside of China. The CDC warned of the “inevitable” spread of coronavirus in the United States, but so far America has been ahead of the game in taking strong quarantine action. Although China announced a drop in new confirmed cases, the number of infected people jumped in South Korea to more than 2,022. The economic impact of unknowns are rattling markets as it relates to magnitude of impact on global supply chains, trade, tourism and travel-related business.

February 14, 2020 Weekly Capital Market Update. Even as the Fed Chair, Jerome Powell, cited the potential threat from the coronavirus in China to the U.S. House of Representatives this week, he nonetheless reassured the markets: “With risks like trade policy uncertainty receding and global growth stabilizing, we find the U.S. economy in a very good place, performing well.” The Nasdaq (+2.21%) led the major indices followed by the S&P 500 Index (+1.58%) and the Dow Jones Industrial Average (+1.02%).

February 7, 2020 Weekly Capital Market Update. While the China-originated coronavirus disrupted short-term market trends, other political and economic events deemed positive by the markets took center stage on the week: The Nasdaq rallied +4.04%, followed by the S&P 500 Index +3.17% and the Dow Jones Industrial Average +3.00%. Though unconscionable to many, U.S. stocks celebrated Trump’s acquittal in the Senate (yet, remains impeached by House), along with news that China will reduce tariffs by 50% on some U.S. products and 225,000 jobs were added in January (far exceed the 161,500 expected). With about two-thirds of the companies in the S&P 500 having already reported fourth quarter(Q4) earnings results, 65% of companies have beaten revenue estimates for Q4 to date; above the 5-year average of 59%. Insofar as the capital markets have appeared to of downgraded the alarming potential ramifications of the coronavirus, we will continue to closely monitor developments with respect to potential negative impacts on U.S. companies operating overseas, along with certain industries having greater risk exposure (Disney, Airlines, Cruise lines, Shopping Centers, etc.)

February 1, 2020 Weekly Capital Market Update. A sharp uptick in coronavirus outbreak trends sparked fears over the potential impact on the U.S. economy this week; 27 countries, 12,000 infections and 250 deaths. On the week, the Dow Jones Industrial Average lost -2.53%, the S&P 500 dropped ‑2.12% and the Nasdaq declined -1.76%, marking the 4th worst market drop over the last 12-months. Given there remains many unknowns about how pervasive this virus will become, investor sentiment has initiated small defensive asset allocation plays. However, given the current makeup of our client portfolios already have a number of defensive positions, and we don’t foresee making any short-term risk-off portfolio changes. We intend to stay the course unless (or until)there is an impetus for any shifts that would align with potential longer-term negative market impacts.